Half-Year Report 1H 2008 - KBC Bank · KBC Bank, 1H 2008 Regulated information, 13 August 2008 – 7 a.m. KBC Bank is a listed company. This release contains information subject to

KBC Bank – Half-Year Report – 1H 2008

Half-Year Report 1H 2008

This report is available in Dutch and English. The Dutch version is the original, the English version is an unofficial translation. KBC warrants that every reasonable effort has been made to avoid any discrepancies between the different language versions. However, should such discrepancies exist, the Dutch version will take precedence.


Disclosures in compliance with European transparency legislation

Note: KBC Bank and KBC Group The KBC group was created on 2 March 2005 through the merger of the KBC Bank and Insurance Holding Company and its parent company, Almanij. The schematic shows the group's legal structure, which has one single entity – KBC Group NV – in control of three underlying companies, viz. KBC Bank, KBC Insurance and Kredietbank SA Luxembourgeoise (or KBL European Private Bankers, i.e. KBL EPB).

KBC Group shares are traded on Euronext Brussels and the Luxembourg Stock Exchange. All KBC Bank shares are owned (directly and indirectly) by KBC Group. A number of KBC Bank's debt instruments are exchange-listed. In the KBC group, financial communication is handled at group level. In keeping with transparency requirements, KBC publishes a number of reports, including annual and interim reports for KBC Group NV, as well as annual and half-year reports for KBC Bank (the present document).

The following statements are made in compliance with the new European transparency legislation transposed into Belgian law by Royal Decree of 14 November 2007, in effect as of 2008. Management certification of financial statements and half-year report “’I, Herman Agneessens, Executive Director of KBC Bank NV, certify that, to the best of my knowledge, the abbreviated financial statements included in the half-year report and based on the relevant accounting standards fairly present in all material respects the financial condition and results of KBC Bank NV, including its consolidated subsidiaries. Based on my knowledge, the half-year report includes all information that is required to be included in such document and does not omit to state all necessary material facts." Statement of risk As a banking group, KBC Bank is exposed to a number of typical risks such as credit default risk, the risk of adverse movements in interest rates, market risk, currency risk, liquidity risk, operational risk, as well as risk in respect of emerging markets, changes in regulations such as IFRS and Basel II, and the economy in general. Based on current knowledge, we believe that the most noteworthy risks facing KBC in the coming quarters are significantly weaker performances than anticipated of the economy in general, and equity capital markets in particular. Key risk management information is provided in this report and in the annual report, both available on www.kbc.com.


Earnings statement • Summary p. 1 • Earnings – 1H 2008 p. 2 • Strategy highlights - 1H 2008 p. 3 • Future developments p. 4 • Financial calendar p. 4

KBC Bank – Half-Year Report – 1H 2008 p.1

Earnings statement KBC Bank, 1H 2008

Regulated information, 13 August 2008 – 7 a.m. KBC Bank is a listed company. This release contains information subject to the transparency requirements imposed on listed companies.

Summary KBC Bank closed the first half of 2008 with a net profit (IFRS) of 741 million euros. This is 46% less than net profit for the strong first half of 2007, when KBC Bank also benefited from exceptional income in the amount of 207 million euros generated by the sale of Intesa Sanpaolo (Italy) shares (excluding this item, the decline in profit came to 37%).

Key figures, KBC Bank (in millions of EUR)

Key figures, income statement (IFRS) 1H 2007 1H 2008 Change

Total income 3 990 3 352 -16%

Operating expenses -2 024 -2 060 +2%

Impairment -82 -232 -

Profit after tax, attributable to the equity holders of the parent 1 374 741 -46%

Return on equity 26% 12% -

Cost/income ratio 51% 61% -

Loan loss ratio 0.12% 0.19% -

Key figures, balance sheet (IFRS) 31-12-2007 30-06-2008 change

Loans and advances to customers 146 710 163 295 +11%

Securities 80 438 82 594 +3%

Deposits from customers and debt certificates 182 567 209 536 +15%

Parent shareholders' equity 12 342 11 883 -4%

Tier-1 ratio (Basel II) 8.5% 9.3%

Non-performing ratio 1.5% 1.4%

For a definition of the ratios, see the ‘Other information’ section. Highlights - 1H 2008:

• Sustained strong lending and deposit-gathering trends.

• Normalisation of capital market income in the second quarter following a weak first quarter.

• Customer loan risk on the rise from a very low level: loan loss ratio of 19 basis points.

• Impact of structured credit revaluations: -194 million euros on net profit after tax (incl. provision increase for monolines) and -117 million euros directly on parent shareholders' equity.

• Impact from markdown of other investment portfolios (mainly shares): -60 million euros.

• Robust solvency ratios: the Tier-1 ratio rose to 9.3% (Basel II).

Earnings – 1H 2008


Earnings – 1H 2008 Consolidated income statement, KBC Bank (in millions of EUR) - IFRS 1H 2007 1H 2008

Net interest income 1 614 1 998

Dividend income 71 67

Net (un)realised gains from financial instruments at fair value 1 014 175

Net realised gains from available-for-sale assets 142 -1

Net fee and commission income 955 923

Other net income 195 191

Total income 3 990 3 352

Operating expenses -2 024 -2 060

Impairment -82 -232

on loans and receivables -81 -164

on available-for-sale assets 0 -60

Share in results of associated companies 40 23

Profit before tax 1 924 1 084

Income tax expense -417 -224

Profit after tax 1 507 860

attributable to minority interests 133 119

attributable to equity holders of the parent 1 374 741

Main developments - 1H 2008:

• Net profit after tax attributable to the equity holders of the parent came to 741 million euros. This is 633 million euros down on the year-earlier figure, despite higher net interest income and a sound cost trend. Besides a number of exceptional items (mainly the 207-million-euro gain realised on the sale of Intesa Sanpaolo shares in the first half of 2007), the decline can be put down chiefly to the sharp drop in trading profits and the increase in impairment (both on loans and on available-for-sale assets). Compared with the first half of 2007, changes in the scope of consolidation (mainly the inclusion of recently acquired banks in Russia and Bulgaria) had no material impact on net profit. The impact on net profit of changes in the value of non-euro currencies was negligible.

• Net interest income amounted to 1 998 million euros, up 24% on the year-earlier figure, thanks mainly to solid volume growth achieved across nearly all of the group's home markets, especially in Central and Eastern Europe. Credit volume, for instance, was up 10% year-on-year in the Belgian retail business and 23% in the Central and Eastern European businesses (on an organic basis, i.e. excluding the positive impact of new acquisitions and currency appreciation in the region). During the same period, deposits went up by 24% (Belgium retail business) and by 8% (Central and Eastern Europe; on an organic basis) respectively. The net interest margin narrowed in Belgium, but widened in Central and Eastern Europe.

• Net (un)realised gains from financial instruments at fair value (trading income and fair value changes) came to 175 million euros, significantly less than in the first half of 2007 (1 014 million euros).Trading income was negatively impacted by the adverse capital market climate (especially in the first quarter of the year). This line item was also adversely affected in the first half of 2008 by a 365-million-euro valuation markdown (before tax) on asset-backed securities and collateralised debt obligations (impact on net profit after tax: -194 million euros). This markdown is due to wider credit spreads, rating downgrades of CDO notes held in the banking book and increased counterparty risk in respect of monoline insurers.

• In the first half of 2008, a net 1-million-euro loss was realised on the sale of available-for-sale assets, whereas a net 142-million-euro gain had been realised in the first half of 2007 (mainly thanks to the sale of Intesa San Paolo shares).

• Net fee and commission income came to 923 million euros, around 3% less than a year earlier, due mainly to the decline in customer investment activity on account of the high volatility and poor performance of the equity markets (year-on-year, for instance, equity markets fell by around 25%).

• Both dividend income (67 million euros) and other net income (191 million euros) were down slightly year-on-year.

• Operating expenses came to 2 060 million euros. Despite the adverse effect of new acquisitions, currency appreciation and the expansion of the branch networks in Central and Eastern Europe, the year-on-year increase came to less than 2%, partly because of the drop in the income-related expenses (lower provisions for bonuses, etc.),


primarily in the group's merchant banking entities. The cost/income ratio went from 51% in the first half of 2007 to 61% in the first half of 2008, mainly on account of the drop in income.

• Impairment amounted to 232 million euros, compared with 82 million euros a year earlier. Loan loss impairment doubled to 164 million euros, pushing the loan loss ratio up to 19 basis points (6 basis points for Belgian retail credit, 43 basis points in Central and Eastern Europe and 16 basis points for lending to businesses). Loan quality remained under control, as illustrated by the non-performing ratio of 1.4% (compared with 1.5% at year-end 2007). Besides impairment recorded on loan losses, 60 million euros in impairment was also posted in the first half of 2008 on available-for-sale assets (mainly shares), compared with zero impairment during the first half of 2007.

• The share in results of associated companies (23 million euros) related mainly to the minority shareholding in Slovenian Nova Ljubljanska banka. Income tax expense for the first six months of 2008 came to 224 million euros; net profit attributable to minority interests to 119 million euros.

• At the end of June 2008, parent shareholders' equity came to 11.9 billion euros, an 0.5-billion-euro (4%) decline on the figure for year-end 2007, as the positive impact of including net profit for the period was offset by the negative impact of dividends paid out (to KBC Group) and the decrease in the revaluation reserve for available-for-sale assets. Solvency remained particularly strong, with a tier-1 ratio of 8.7% (based on Basel I) or 9.3% (Basel II).

Strategy highlights - 1H 2008

Main acquisitions and divestments - 1H 2008:

• Consolidation of Economic and Investment Bank: in December 2007, KBC finalised the acquisition of Bulgarian Economic and Investment Bank (EIB). This bank's results are consolidated from the first quarter of 2008. Initially, KBC will focus on optimising EIB's branch network, introducing bancassurance in conjunction with DZI Insurance (the Bulgarian insurance subsidiary of KBC Insurance) and optimising and setting up certain lines of business such as asset management, private banking, leasing and cash management services. At the end of June 2008, KBC Bank owned 77% of EIB.

• Acquisition of Istrobanka: In Slovakia, KBC was able to strengthen its position on the retail market considerably by acquiring full ownership of Istrobanka. In terms of assets, Istrobanka is the tenth largest bank in Slovakia. KBC is already present in Slovakia through its subsidiary ČSOB. The combination will result in the fourth largest banking business in Slovakia, with a market share of some 10%. From the second half of 2008, Istrobanka will be included in group results.

• Greenfield consumer credit business started up in Romania: in April, KBC announced that the group would be starting up a consumer credit business in Romania by setting up a greenfield venture. KBC Consumer Finance will offer instalment loans (POS loans) in Romania in close collaboration with retailers who will receive support to help them grow their business. It will also offer cash loans and credit cards directly to Romanian consumers through its own network of sales outlets, agents, brokers, call centres and the Internet.

• Sales process set up to sell the participation in Nova Ljubljanska banka (NLB): during the first half of 2008, KBC launched a structured process to sell its stake in NLB in Slovenia. On reassessing its investment in NLB in 2006, KBC decided to position itself as a purely financial investor in the Slovene bank. In the first half of 2008, KBC set the terms and conditions for a comprehensive structured process that will govern any future sale of its minority stake in NLB to a third party and the divestment of its 50% stake in NLB Vita. Under IFRS 5, NLB will be treated as an available-for-sale asset as of the second quarter of 2008.

Other developments in 1H 2008:

• Business plan for Central and Eastern Europe updated: this region is expected to nearly double its 2007 profit contribution by 2010 (at KBC group level, therefore including KBC Insurance's activities in this region). As a result, KBC is investing in providing support for strong organic growth by expanding sales networks, transferring product know-how to new markets and optimising its cross-selling approach. KBC is also working to unlock more synergies across markets by, for instance, harmonising group-wide business processes and IT applications.

• Sustained cost control: in view of the adverse operating environment, a cost budget review was carried out in the second quarter.


Future developments

André Bergen: "While overall economic activity is slowing, the quality of our overall franchise remains strong, with our Central and Eastern European operations driving growth. KBC has the clear ambition to double its net earnings in the region in the foreseeable future. Furthermore, we have recently enhanced our cost discipline throughout the group to cope adequately with increased cost inflation. We are also happy to see that our balance sheet is robust. Asset quality has proven to be quite solid across asset classes, while our solvency position is amongst the most secure in the financial sector."

Financial calendar

Financial communication is organised at KBC group level. Consequently, shown below is the calendar for upcoming earnings releases by KBC Group and KBC Bank. For a more extensive version of the calendar, including analyst and investor meetings, see www.kbc.com/ir/calendar. Financial calendar

KBC Group Earnings Release, 1H 2008 7 August 2008

KBC Bank Earnings Release, 1H 2008 13 August 2008

KBC Group Earnings Release, 3Q 2008 6 November 2008

KBC Group Earnings Release, 4Q 2008 and FY 2008 12 February 2009


Consolidated

financial statements • Consolidated income statement p. 6 • Consolidated balance sheet p. 7 • Condensed consolidated statement of changes in equity p. 8 • Condensed consolidated cashflow statement p. 9 • Notes on the accounting policies p. 9 • Notes on segment reporting p. 10 • Notes to the income statement p. 12 • Notes to the balance sheet p. 15 • Other notes p. 18


Consolidated financial statements KBC Bank, 1H 2008

Consolidated income statement

In millions of EUR Note 1H 2007 1H 2008Net interest income 3 1 614 1 998 Interest income 3 6 714 7 785 Interest expense 3 - 5 100 - 5 788Dividend income 4 71 67Net (un)realised gains from financial instruments at fair value through profit or loss 5 1 014 175Net realised gains from available-for-sale assets 6 142 - 1Net fee and commission income 7 955 923 Fee and commission income 7 1 327 1 284 Fee and commission expense 7 - 373 - 361Other net income 8 195 191TOTAL INCOME 3 990 3 352Operating expenses 9 - 2 024 - 2 060

staff expenses 9,10 - 1 096 - 1 065 general administrative expenses 9 - 807 - 902 depreciation and amortisation of fixed assets 9 - 103 - 110 provisions for risks and charges 9 - 18 17

Impairment 11 - 82 - 232 on loans and receivables 11 - 81 - 164 on available-for-sale assets 11 0 - 60 on goodwill 11 0 0 on other 11 - 1 - 8Share in results of associated companies 12 40 23PROFIT BEFORE TAX 1 924 1 084Income tax expense 13 - 417 - 224Net post-tax income from discontinued operations 0 0PROFIT AFTER TAX 1 507 860

attributable to minority interest 133 119attributable to equity holders of the parent 1 374 741


Consolidated balance sheet

ASSETS (in millions of EUR) Note 31-12-2007 30-06-2008Cash and cash balances with central banks 2 906 3 746Financial assets 14-21 299 613 318 039

Held for trading 14-21 73 394 83 604Designated at fair value through profit or loss 14-21 36 284 29 557Available for sale 14-21 26 933 29 991Loans and receivables 14-21 152 778 164 912Held to maturity 14-21 9 525 9 133Hedging derivatives 14-21 698 842

Fair value adjustments of hedged items in portfolio hedge of interest rate risk - 223 - 335Tax assets 23 659 1 025

Current tax assets 23 102 160Deferred tax assets 23 556 865

Non-current assets held for sale and disposal groups 41 627Investments in associated companies 24 646 80Investment property 25 448 485Property and equipment 25 1 760 2 426Goodwill and other intangible assets 26 2 008 2 207Other assets 22 1 618 1 405

TOTAL ASSETS 309 476 329 705

LIABILITIES AND EQUITY(in millions of EUR) 31-12-2007 30-06-2008Financial liabilities 14-21 289 175 310 429

Held for trading 14-21 41 853 36 949Designated at fair value through profit or loss 14-21 37 503 44 657Measured at amortised cost 21-21 209 382 228 452Hedging derivatives 14-21 438 371

Fair value adjustments of hedged items in portfolio hedge of interest rate risk 5 0 0Tax liabilities 23 467 443

Current tax liabilities 23 388 320Deferred tax liabilies 23 79 123

Non-current liabilities held for sale and liabilities associated with disposal groups 0 0Provisions for risks and charges 27 401 461Other liabilities 28 5 519 4 890TOTAL LIABILITIES 295 562 316 223Total equity 30 13 914 13 482

Parent shareholders' equity 30 12 342 11 883Minority interests 30 1 572 1 599

TOTAL LIABILITIES AND EQUITY 309 476 329 705

KBC's minority stake in Nova Ljubljanska banka (NLB) is treated under IFRS 5 as an available-for-sale asset from 30 June 2008, given the ongoing process for the sale of this minority interest to a third party and the planned disinvestment from NLB Vita.


Condensed consolidated statement of changes in equity

In millions of EUR Issued and paid up share capital

Share premium

Other equity (Mandatorily convertible

bonds)

Treasury shares

Revaluation reserve (AFS

assets)

Hedging reserve

(cashflow hedges)

Reserves Translation differences

Parent share-

holders' equity

Minority interests

Total equity

30-06-2007Balance at the beginning of the period 3 763 490 188 0 555 46 5 491 71 10 603 1 565 12 168

Recognised directly in equity 0 2 - 2 0 - 383 54 - 2 - 28 - 360 0 - 360Net profit for the period 0 0 0 0 0 0 1 374 0 1 374 133 1 507Total income and expense for the period 0 0 0 0 - 383 54 1 372 - 28 1 014 133 1 147

Dividends 0 0 0 0 0 0 - 661 0 - 661 0 - 661Capital increase 0 0 - 1 0 0 0 0 0 0 0 0(Results / Derivatives on) treasury shares 0 0 0 0 0 0 0 0 0 0 0Change in minority interests 0 0 0 0 0 0 0 0 0 - 156 - 156

Total change 0 0 - 1 0 - 383 54 711 - 28 354 - 23 331

Balance at the end of the period 3 763 490 187 0 172 100 6 202 42 10 957 1 542 12 499

of which revaluation reserve for shares 272of which revaluation reserve for bonds - 100

of which revaluation reserve for other assets than bonds and shares 0

30-06-2008Balance at the beginning of the period 4 030 1 723 186 0 - 46 73 6 365 11 12 342 1 572 13 914

Recognised directly in equity 0 0 0 0 - 518 107 0 94 - 318 0 - 318Net profit for the period 0 0 0 0 0 0 741 0 741 119 860Total income and expense for the period 0 0 0 0 - 518 107 740 94 423 119 542

Dividends 0 0 0 0 0 0 - 882 0 - 882 0 - 882Capital increase 0 0 0 0 0 0 0 0 0 0 0(Results / Derivatives on) treasury shares 0 0 0 0 0 0 0 0 0 0 0Change in minority interests 0 0 0 0 0 0 0 0 0 - 92 - 92

Total change 0 0 0 0 - 518 107 - 142 94 - 459 27 - 432

Balance at the end of the period 4 030 1 723 186 0 - 565 180 6 223 105 11 883 1 599 13 482

of which revaluation reserve for shares 63of which revaluation reserve for bonds - 627

of which revaluation reserve for other assets than bonds and shares - 1


Condensed consolidated cashflow statement In millions of EUR 1H 2007 1H 2008Net cash from (used in) operating activities - 1 195 2 348Net cash from (used in) investing activities - 651 869Net cash from (used in) financing activities - 724 2 177

Net increase or decrease in cash and cash equivalents - 2 570 5 394Cash and cash equivalents at the beginning of the period 16 706 14 459Effects of exchange rate changes on opening cash and cash equivalents - 51 44Cash and cash equivalents at the end of the period 14 084 19 898

Notes on the accounting policies

Provided below are selected notes to the consolidated financial statements. The numbers and titles of notes that are contained only in the annual report, but not in the half-year report of KBC Bank are only shown below to preserve the link with the annual report.

Note 1a: Statement of compliance The interim consolidated financial statements of KBC Bank have been prepared in accordance with the International Financial Reporting Standards (in particular IAS 34), as adopted for use in the European Union (‘endorsed IFRS’). The consolidated financial statements present one year of comparative information KBC Bank will apply IFRS 8 from 1 January 2009.

At the start of the 2008 financial year, KBC Bank changed the presentation of its balance sheet to make it correspond more closely with the Belgian prudential reporting presentation for banks. Whereas in previous years, 'accrued interest income' and 'accrued interest expense' were disclosed separately in the balance sheet, they are as of 2008 included in the corresponding line items of the financial assets and financial liabilities. Total 'accrued interest income' and 'accrued interest expense' is still disclosed in Note 14, Financial assets and liabilities, breakdown by portfolio and product. The reference figures at 31 December 2007 have been restated accordingly. Note 1b: Summary of significant accounting policies A summary of the main accounting policies is provided in the 2007 annual report of KBC Bank. In the first half of 2008, no changes were made to the content of the accounting policies that had a material impact on the results.


Notes on segment reporting Note 2: Reporting according to the legal structure and by geographic segment Under IFRS, the primary segment reporting format used by KBC Bank is based on the bank’s legal structure. KBC Bank distinguishes between the following primary segments: Banking: KBC Bank and its subsidiaries (except the ones mentioned below);

• Asset Management: KBC Asset Management and its subsidiaries; • Leasing activities: KBC Lease and its subsidiaries; • Equities activities: KBC Financial Products, KBC Securities and KBC Private Equity; Other: mainly smaller subsidiaries that do not belong to the above segments; Intersegment eliminations: intersegment transactions are transactions conducted between the different primary segments at arm’s length. As a number of items are reported on a net basis (e.g., Net interest income), the balance of the intragroup transactions for these items is limited. Intersegment transfers are measured on the basis actually used to price the transfers.

The IFRS secondary segment reporting format is based on geographic areas, and reflects KBC’s focus on its two home markets – Belgium and Central and Eastern Europe (including Russia) – and its selective presence in other countries (‘rest of the world’, i.e. mainly the US, Southeast Asia and Western Europe excluding Belgium). The geographic segmentation is based on the location where the services are rendered. Since at least 95% of the customers are local customers, the location of the branch or subsidiary determines the geographic breakdown of both the balance sheet and income statement.


In millions of EURBanking

activities Asset

Management Leasing

activities Equity

activities OtherIntersegment eliminations

KBC Bank Consolidated

INCOME STATEMENT 1H 2007Net interest income 1 609 12 56 - 160 92 5 1 614Dividend income 28 3 0 39 0 0 71

376 4 0 634 0 0 1 014Net realised gains from available-for-sale assets 138 1 0 0 3 0 142Net fee and commission income 641 223 - 5 85 18 - 8 955Other net income 155 3 14 8 37 - 22 195TOTAL INCOME 2 947 246 66 606 150 - 24 3 990Operating expenses - 1 570 - 45 - 38 - 348 - 48 24 - 2 024Impairment - 75 0 - 5 0 - 2 0 - 82

on loans and receivables - 74 0 - 5 0 - 2 0 - 81on available-for-sale assets 0 0 0 0 0 0 0on goodwill 0 0 0 0 0 0 0on other - 2 0 0 1 0 0 - 1

Share in results of associated companies 37 0 0 2 0 0 40PROFIT BEFORE TAX 1 339 202 23 260 100 0 1 924Income tax expense - 294 - 45 - 8 - 64 - 7 0 - 417Net post-tax income from discontinued operations 0 0 0 0 0 0 0PROFIT AFTER TAX 1 045 156 15 197 93 0 1 507

attributable to minority interests 16 75 0 - 2 43 0 133attributable to equity holders of the parent 1 029 81 15 198 50 0 1 374

INCOME STATEMENT 1H 2008Net interest income 2 082 6 26 - 198 86 - 3 1 998Dividend income 31 5 0 31 0 0 67

- 49 - 1 - 2 227 0 0 175Net realised gains from available-for-sale assets - 1 1 0 0 - 1 0 - 1Net fee and commission income 595 214 4 67 40 2 923Other net income 132 5 36 36 22 - 39 191TOTAL INCOME 2 789 229 65 163 147 - 41 3 352Operating expenses - 1 753 - 52 - 39 - 212 - 44 41 - 2 060Impairment - 199 0 - 19 - 13 - 2 0 - 232

on loans and receivables - 144 0 - 19 - 1 - 1 0 - 164on available-for-sale assets - 54 0 0 - 6 0 0 - 60on goodwill 0 0 0 0 0 0 0on other - 1 0 0 - 6 0 0 - 8

Share in results of associated companies 24 0 0 0 0 0 23PROFIT BEFORE TAX 860 177 7 - 61 100 0 1 084Income tax expense - 176 - 44 - 3 6 - 6 0 - 224Net post-tax income from discontinued operations 0 0 0 0 0 0 0PROFIT AFTER TAX 684 133 4 - 56 94 0 860

attributable to minority interests 13 64 0 0 42 0 119attributable to equity holders of the parent 671 69 4 - 56 52 0 741

BALANCE SHEET 31-12-2007

TOTAL ASSETS 252 004 727 4 542 44 065 8 139 309 476TOTAL LIABILITIES 238 375 72 171 31 571 25 373 295 562

BALANCE SHEET 30-06-2008

TOTAL ASSETS 271 665 828 4 882 43 441 8 888 329 705TOTAL LIABILITIES 254 694 118 254 33 713 27 444 316 223

Net (un)realised gains from financial instruments at fair value through profit or loss

Net (un)realised gains from financial instruments at fair value through profit or loss

In millions of EUR Belgium

Central and Eastern

Europe and Russia

Rest of the world

KBC Bank Consolidated

1H 2007Gross income 2 057 995 938 3 990

31-12-2007Total assets (period-end) 169 734 48 952 90 790 309 476

165 311 44 650 85 601 295 562

1H 2008Gross income 1 595 1 296 461 3 352

30-06-2008Total assets (period-end) 197 602 60 845 71 258 329 705

179 942 55 679 80 602 316 223

Total liabilities (period-end)

Total liabilities (period-end)


Notes to the income statement

Note 3: Net interest income

In millions of EUR 1H 2007 1H 2008Total 1 614 1 998

Interest income 6 714 7 785Available-for-sale assets 599 597Loans and receivables 3 609 4 584Held-to-maturity investments 177 194Other assets not at fair value 47 91Subtotal, interest income from financial assets not measured at fair valuethrough profit or loss 4 433 5 467Financial assets held for trading 773 959Hedging derivatives 330 418Other financial assets at fair value through profit or loss 1 178 941

Interest expense - 5 100 - 5 788Financial liabilities measured at amortised cost - 3 526 - 4 126Other - 6 - 2Investment contracts at amortised cost 0 0Subtotal, interest expense for financial assets not measured at fair valuethrough profit or loss - 3 532 - 4 128Financial liabilities held for trading - 214 - 196Hedging derivatives - 310 - 358Other financial liabilities at fair value through profit or loss - 1 044 - 1 105 Note 4: Dividend income

In millions of EUR 1H 2007 1H 2008Total 71 67

Breakdown by type 71 67Held-for-trading shares 42 36Shares initially recognised at fair value through profit or loss 0 0Available-for-sale shares 29 32


Note 5: Net (un)realised gains from financial instruments at fair value through profit or loss.

Note available in annual report only. Note 6: Net realised gains from available-for-sale assets

In millions of EUR 1H 2007 1H 2008Total 142 - 1

Breakdown by portfolioFixed-income assets - 132 0Shares 274 - 2

Note 7: Net fee and commission income

In millions of EUR 1H 2007 1H 2008Total 955 923

Fee and commission income 1 327 1 284Securities and asset management 854 687Commitment credit 89 103Payments 199 244Other 186 250

Fee and commission expense - 373 - 361Commission paid to intermediaries - 40 - 36Other - 332 - 325

Note 8: Other net income Note 9: Operating expenses Note 10: Personnel Notes available in annual report only.


Note 11: Impairment (income statement)

In millions of EUR 1H 2007 1H 2008Total - 82 - 232

Impairment on loans and receivables - 81 - 164

Specific impairments for on-balance-sheet lending - 59 - 137Specific impairments for off-balance-sheet credit commitments - 13 - 9Portfolio-based impairments - 9 - 19

Impairment on available-for-sale assets 0 - 60

Shares 0 - 59Other 0 - 1

Impairment on goodwill 0 0

Impairment on other - 1 - 8

Intangible assets, other than goodwill 0 0 Property and equipment 0 - 1

Held-to-maturity assets 1 0 Associated companies (goodwill) 0 0 Other - 2 - 7

Note 12: Share in results of associated companies Note 13: Income tax expense Notes available in annual report only.


Notes to the balance sheet Note 14: Financial assets and liabilities, breakdown by portfolio and product

FINANCIAL ASSETS (in millions of EUR)Held for trading

Designated at fair value

through profit or loss

Available for sale

Loans and receivables

Held to maturity

Hedging derivatives

Measured at amortised cost Total

31-12-2007

16 098 16 014 0 15 417 - - - 47 529Loans and advances to customers 2 2 067 8 756 0 135 887 - - - 146 710

Discount and acceptance credit 0 0 0 717 - - - 717Consumer credit 0 0 0 3 885 - - - 3 885Mortgage loans 0 3 254 0 43 513 - - - 46 767Term loans 2 067 5 322 0 65 796 - - - 73 185Finance leasing 0 0 0 6 883 - - - 6 883Current account advances 0 0 0 7 162 - - - 7 162Securitised loans 0 0 0 264 - - - 264Other 0 181 0 7 667 - - - 7 848

Equity instruments 16 992 15 939 - - - - 17 947Investment contracts (insurance) - 0 - - - - - 0Debt instruments issued by 16 391 11 199 25 604 - 9 296 - - 62 491

Public bodies 5 218 8 581 13 889 - 8 737 - - 36 425Credit institutions and investment firms 4 059 741 3 575 - 279 - - 8 654Corporates 7 114 1 878 8 140 - 280 - - 17 412

Derivatives 21 503 - - - - 524 - 22 026

Total carrying value excluding accrued intrest income 73 051 35 985 26 543 151 304 9 296 524 0 296 702Accrued interest income 344 299 390 1 475 229 175 0 2 910Total carrying value including accrued interest income 73 394 36 284 26 933 152 778 9 525 698 0 299 6131 Of which reverse repos 29 9192 Of which reverse repos 7 298

30-06-2008

17 018 8 701 2 19 066 - - - 44 786Loans and advances to customers 2 9 408 8 380 174 145 333 - - - 163 295

Discount and acceptance credit 0 0 0 209 - - - 209Consumer credit 0 0 0 4 675 - - - 4 675Mortgage loans 0 3 272 0 48 534 - - - 51 807Term loans 9 408 4 951 174 69 234 - - - 83 767Finance leasing 0 0 0 6 805 - - - 6 805Current account advances 0 0 0 8 396 - - - 8 396Securitised loans 0 0 0 0 - - - 0Other 0 156 0 7 480 - - - 7 636

Equity instruments 13 681 11 840 - - - - 14 532Investment contracts (insurance) - 0 - - - - - 0Debt instruments issued by 18 454 12 112 28 567 - 8 929 - - 68 062

Public bodies 8 036 9 561 17 440 - 8 428 - - 43 465Credit institutions and investment firms 4 250 590 3 667 - 250 - - 8 756Corporates 6 168 1 962 7 460 - 251 - - 15 841

Derivatives 24 691 - - - - 721 - 25 412

Total carrying value excluding accrued interest income 83 252 29 204 29 583 164 398 8 929 721 0 316 087Accrued interest income 352 353 409 514 204 121 0 1 952Total carrying value including accrued interest income 83 604 29 557 29 991 164 912 9 133 842 0 318 039

1 Of which reverse repos 23 1962 Of which reverse repos 13 086

Loans and advances to credit institutions and investment firms 1

Loans and advances to credit institutions and investment firms 1

As of 1 January 2008, full service car leases qualify as operational leases instead of finance leases. As a result, 529 million euros has been reclassifed and transferred from loans and advances to customers (finance leasing) to property and equipment.


FINANCIAL LIABILITIES (in millions of EUR)Held for trading

Designated at fair value

through profit or loss

Available for sale

Loans and receivables

Held to maturity

Hedging derivatives

Measured at amortised cost Total

8 210 15 156 - - - - 46 373 69 738Deposits from customers and debt certificates 4 2 452 21 927 - - - - 158 188 182 567

Deposits from customers 0 14 139 - - - - 114 698 128 837 Demand deposits 0 1 415 - - - - 36 343 37 758 Time deposits 0 12 723 - - - - 46 913 59 636 Savings deposits 0 0 - - - - 27 079 27 079 Special deposits 0 0 - - - - 3 444 3 444 Other deposits 0 0 - - - - 919 919

Debt certificates 2 452 7 788 - - - - 43 490 53 730 Certificates of deposit 0 2 245 - - - - 15 697 17 942 Customer savings certificates 0 0 - - - - 2 950 2 950 Convertible bonds 0 0 - - - - 0 0 Non-convertible bonds 2 452 4 497 - - - - 19 037 25 986 Convertible subordinated liabilities 0 0 - - - - 0 0 Non-convertible subordinated liabilities 0 1 046 - - - - 5 806 6 852

Liabilities under investment contracts - 0 - - - - - 0Derivatives 25 828 - - - - 118 - 25 946Short positions 4 809 - - - - - - 4 809

in equity instruments 3 723 - - - - - - 3 723in debt instruments 1 085 - - - - - - 1 085

Other 243 0 - - - - 3 867 4 110

Total carrying value excluding accrued interest expense 41 542 37 082 - - - 118 208 427 287 170Accrued interest expense 311 420 - - - 320 954 2 006Total carrying value including accrued interest expense 41 853 37 503 - - - 438 209 382 289 1753 Of which repos 21 0064 Of which repos 8 489

1 604 12 339 - - - - 43 446 57 388Deposits from customers and debt certificates 4 2 049 32 062 - - - - 175 426 209 536

Deposits from customers 0 19 730 - - - - 128 480 148 210 Demand deposits 0 1 399 - - - - 47 623 49 021 Time deposits 0 18 331 - - - - 50 420 68 751 Savings deposits 0 0 - - - - 25 263 25 263 Special deposits 0 0 - - - - 3 846 3 846 Other deposits 0 0 - - - - 1 328 1 328

Debt certificates 2 049 12 332 - - - - 46 946 61 326 Certificates of deposit 0 5 598 - - - - 16 093 21 691 Customer savings certificates 0 0 - - - - 3 135 3 135 Convertible bonds 0 0 - - - - 0 0 Non-convertible bonds 2 049 5 786 - - - - 19 795 27 630 Convertible subordinated liabilities 0 0 - - - - 0 0 Non-convertible subordinated liabilities 0 948 - - - - 7 922 8 870

Liabilities under investment contracts - 0 - - - - - 0Derivatives 27 735 - - - - 85 - 27 820Short positions 5 367 - - - - - - 5 367

in equity instruments 4 339 - - - - - - 4 339in debt instruments 1 028 - - - - - - 1 028

Other 0 0 - - - - 8 160 8 160

Total carrying value excluding accrued interest expense 36 755 44 401 - - - 85 227 031 308 271Accrued interest expense 194 256 - - - 286 1 421 2 158Total carrying value including accrued interest expense 36 949 44 657 - - - 371 228 452 310 4293 Of which repos 12 1804 Of which repos 13 579

Deposits from credit institutions and investment firms 3

31-12-2007

30-06-2008

Deposits from credit institutions and investment firms 3


Note 15: Financial assets and liabilities, breakdown by portfolio and geographic location Note 16: Financial assets, breakdown by portfolio and quality Note 17: Financial assets and liabilities, breakdown by portfolio and remaining term to maturity Note 18: Impairment on financial assets that are available for sale Note 19: Impairment on financial assets held to maturity Notes available in annual report only. Note 20: Impairment on loans and receivables (balance sheet) In millions of EUR 31-12-2007 30-06-2008Total 2 128 2 217

Breakdown by typeSpecific impairment, on-balance-sheet lending 1 859 1 875Specific impairment, off-balance-sheet credit commitments 84 91Portfolio-based impairment 185 251

Breakdown by counterpartyImpairment for loans and advances to banks 6 1Impairment for loans and advances to customers 2 015 2 094Specific and portfolio based impairment, off-balance-sheet credit commitments 108 122

Note 21: Derivative financial instruments Note 22: Other assets Note 23: Tax assets and tax liabilities Note 24: Investments in associated companies Note 25: Property and equipment and investment property Note 26: Goodwill and other intangible assets Note 27: Provisions for risks and charges Note 28: Other liabilities Note 29: Retirement benefit obligations Notes available in annual report only. Note 30: Parent shareholders' equity in number of shares 31-12-2007 30-06-2008Total number of shares issued and fully paid up 417 232 809 417 232 809

Breakdown by typeOrdinary shares 412 331 794 412 331 794Other equity instruments 4 901 015 4 901 015

of which ordinary shares that entitle the holder to a dividend payment 412 331 794 412 331 794of which treasury shares 0 0

Other informationPar value per share (in euros) 9,77 9,77Number of shares issued but not fully paid up 0 0 All KBC Bank ordinary shares are owned by KBC Group NV (412 331 793 shares) and its subsidiary KBC Insurance (1 share).

Other notes


Note 31: Commitments and contingent liabilities Note 32: Leasing Notes available in annual report only. Note 33: Related-party transactions in millions of EUR

Parent Company Subsidiaries Associates

Other related parties Total

Parent Company Subsidiaries Associates Joint Ventures

Other related parties Total

Assets 88 815 733 2 186 3 822 49 939 707 23 1 632 3 351Loans and advances 77 40 678 1 176 1 971 21 0 682 0 744 1 447

Current accounts 0 0 0 122 122 1 0 0 0 56 58Term loans 77 40 678 1 054 1 850 20 0 681 0 688 1 389Finance leases 0 0 0 0 0 0 0 0 0 0 0Consumer credit 0 0 0 0 0 0 0 0 0 0 0Mortgage loans 0 0 0 0 0 0 0 0 0 0 0

0 0Equity instruments 9 114 6 145 274 0 177 8 23 0 209

Trading securities 7 0 6 133 145 0 0 0 0 0 0Investment securities 3 114 0 12 129 0 177 8 23 0 209

0Other Receivables 2 661 48 865 1 576 28 762 18 0 888 1 695

Liabilities 178 548 7 5 284 6 017 359 541 109 0 5 756 6 765Deposits 146 532 7 4 663 5 347 36 525 108 0 4 899 5 568

deposits 146 531 4 4 516 5 197 36 525 105 0 4 778 5 443other borrowings 0 0 3 147 150 0 0 3 0 121 124

Other financial liabilities 0 2 0 347 349 250 2 0 0 498 750Debt certificates 0 2 0 347 349 250 2 0 0 496 747Subordinated liabilities 0 0 0 0 1 0 0 0 0 3 3Share based payments 0 0 0 0 0 0 0 0 0 0 0

Granted 0 0 0 0 0 0 0 0 0 0 0Exercised 0 0 0 0 0 0 0 0 0 0 0

Other liabilities 32 14 0 274 321 73 14 1 0 359 447

Income statement - 275 - 36 32 - 236 - 515 - 10 - 19 17 0 - 336 - 348Net interest income - 40 - 30 31 - 130 - 170 - 11 - 16 16 0 - 102 - 113Gross earned premiums 0 0 0 0 0 0 0 0 0 0 0Dividend income 17 4 2 0 23 15 2 1 0 0 18Net fee and commission income 2 - 8 0 147 141 1 - 4 0 0 83 79Other income 17 0 0 18 36 0 0 0 0 20 20Other Expenses - 271 - 3 0 - 272 - 546 - 14 - 1 0 0 - 337 - 353

31-12-2007 30-06-2008TRANSACTIONS WITH RELATED PARTIES, EXCLUDING DIRECTORS


Note 34: Auditor’s fee Note available in annual report only. Note 35: List of significant subsidiaries and associated companies

Company Registered office

Ownership percentage at

KBC Group level Activity

Fully consolidated subsidiariesAbsolut Bank Moscow - RU 95,00 Credit institutionAntwerpse Diamantbank NV Antwerp - BE 100,00 Credit institutionCBC Banque SA Brussels - BE 100,00 Credit institutionCENTEA NV Antwerp - BE 99,56 Credit institutionCSOB a.s. (Czech Republic) Prague - CZ 100,00 Credit institutionCSOB a.s. (Slovak Republic) Bratislava - SK 100,00 Credit institutionEconomic and Investment Bank AD Sofia - BG 77,08 Credit institutionFin-Force NV Brussels - BE 90,00 Processing financial transactionsIIB Bank Plc Dublin - IE 100,00 Credit institutionKBC Asset Management NV Brussels - BE 100,00 Asset ManagementKBC Bank NV Brussels - BE 100,00 Credit institutionKBC Bank Deutschland AG Bremen - DE 100,00 Credit institutionKBC Bank Funding LLC & Trust (group) New York - US 100,00 Issuance of trust preferred securitiesKBC Bank Nederland NV Rotterdam - NL 100,00 Credit institutionKBC Clearing NV Amsterdam - NL 100,00 ClearingKBC Commercial Finance NV (ex-International Factors NV) Brussels - BE 100,00 FactoringKBC Credit Investments NV Brussels - BE 100,00 Investments in credit-linked securitiesKBC Finance Ireland Dublin - IE 100,00 LendingKBC Financial Products (group) Various locations 100,00 Equities and derivatives tradingKBC Internationale Financieringsmaatschappij NV Rotterdam - NL 100,00 Issuance of bondsKBC Lease (group) Various locations 100,00 LeasingKBC Peel Hunt Ltd. London - GB 99,99 Stock exchange broker / corporate financeKBC Private Equity NV Brussels - BE 100,00 Private equityKBC Real Estate NV Zaventem - BE 100,00 Real estateKBC Securities NV Brussels - BE 100,00 Stock exchange broker / corporate financeK&H Bank Rt. Budapest - HU 100,00 Credit institutionKredyt Bank SA Warsaw - PL 80,00 Credit institution

Associated companiesNova Ljubljanska banka d.d. (group) Ljubljana - SI 34,00 Credit institution

Note 36: Main changes in the scope of consolidation

Company Consolidation method

Comments

For income statement comparison 1H 2007 1H 2008ADDITIONSBanking Absolut Bank Full - 95,00% Recognised in income statement from 3Q 2007

Banking Economic and Investment Bank AD Full - 77,08% Recognised in income statement from 1Q 2008

Banking CSOB a.s. (Slovak Republic) Full - 100,00% Demerger with CSOB (Czech Republic) as of 1Q08

For balance sheet comparison 31-12-2007 30-06-2008ADDITIONSBanking CSOB a.s. (Slovak Republic) Full - 100,00% Demerger with CSOB (Czech Republic) as of

1Q08

Ownership percentage at KBC Group level

Note 37: Post-balance-sheet events Significant (non-adjusting) events between the balance sheet date (30 June 2008) and the publication of this report (13 August 2008):

• On 1 July 2008, BAWAG P.S.K. and KBC closed the acquisition of Istrobanka after receiving the necessary approval of the Central Bank of Slovakia and the Anti-Trust Commission for KBC to acquire full ownership (100%) of Istrobanka and Istro Asset Management. The acquisition of Istrobanka, the tenth largest bank in terms of assets in Slovakia, was announced on 20 March 2008. Istrobanka will be consolidated as of 3Q 2008.

• On 5 July 2008, KBC increased the base interest rate on savings deposits of individuals in Belgium to 4% for savings of up to 40 000 euros.


Note 38: General information (IAS 1) Note available in annual report only. Auditor’s report Report of the statutory auditor to the shareholders of KBC Bank NV on the review of the interim condensed consolidated financial statements as of 30 June 2008 and for the six months then ended Introduction We have reviewed the accompanying interim condensed consolidated balance sheet of KBC Bank NV (the “Company”) as at 30 June 2008 and the related interim condensed consolidated income statement, statement of changes in equity and cash flow statement for the six-month period then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (“IAS 34”) as adopted for use in the European Union. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review. Scope of Review We conducted our review (“revue limitée/beperkt nazicht” as defined by the “Institut des Reviseurs d’Entreprises/Instituut der Bedrijfsrevisoren”) in accordance with the recommendation of the “Institut des Reviseurs d’Entreprises/Instituut der Bedrijfsrevisoren” applicable to review engagements. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the auditing standards of the “Institut des Reviseurs d’Entreprises/Instituut der Bedrijfsrevisoren” and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 as adopted for use in the European Union. Brussels, 13 august 2008 Ernst & Young Bedrijfsrevisoren BCVBA Statutory auditor represented by

Jean-Pierre Romont Partner Ref.: 09JPR0015


Other information • Glossary of ratios used p. 22 • Credit ratings p. 22 • Solvency p. 23 • Risk management p. 24 • Contact details p. 26

KBC Group – Half-Year Report – 1H 2008 p. 22

Other information KBC Bank, 1H 2008

Glossary of ratios used CAD ratio [consolidated regulatory capital, KBC Bank] / [total weighted risk volume, KBC Bank]. Cover ratio [individual impairment on non-performing loans] / [outstanding non-performing loans].

For a definition of ‘non-performing’, see ‘Non-performing ratio’. The ratio may also include individual impairment on performing loans and portfolio-based impairment.

Cost/income ratio [operating expenses] / [total income] Loan loss ratio [net changes in individual and portfolio-based impairment for credit risks] / [average

outstanding loan portfolio]. Non-performing ratio [amount outstanding of non-performing loans (loans for which principal repayments or

interest payments are more than ninety days in arrears or overdrawn)] / [total outstanding loan portfolio].

Return on equity [profit after tax, attributable to equity holders of the parent] / [average parent

shareholders’ equity, excluding the revaluation reserve for available-for-sale assets]. Tier-1 ratio [consolidated Tier-1 capital, KBC Bank] / [total weighted risk volume, KBC Bank].

Credit ratings KBC Bank credit ratings, end of July 2008 Long-term

rating Outlook Short-term

rating

Fitch AA- Stable F1+

Moody’s Aa2 Negative P-1

Standard & Poor’s AA- Stable A1+


Solvency In millions of EUR 31-12-2007 31-12-2007 30-06-2008 30-06-2008

Basel I Basel II Basel I Basel IIRegulatory capital

Regulatory capital, KBC Bank (after profit appropriation) 15 543 15 723 17 149 17 707

Tier-1 capital 11 525 10 942 13 442 12 908 Parent shareholders' equity 12 342 12 342 11 883 11 883 Intangible fixed assets - 197 - 197 - 206 - 206 Goodwill on consolidation - 1 811 - 1 811 - 2 001 - 2 001 Innovative hybrid tier-1 instruments 1 694 1 694 1 614 1 614 Non-innovative hybrid tier-1 instruments 0 0 1 746 1 746 Minority interests 584 584 638 638 Elimination Mandatorily convertible bonds - 186 - 186 - 186 - 186

Revaluation reserve available-for-sale assets (AFS ) 46 46 565 565Hedging reserve (cashflow hedges) - 73 - 73 - 180 - 180Minority interest in AFS reserve & hedging reserve, cashflow hedges 2 2 13 13

Dividend payout - 876 - 876 - 444 - 444 Items to be deducted - - 583 - - 534

Tier-2 & 3 capital 4 018 4 782 3 707 4 799 Mandatorily convertible bonds 186 186 186 186 Perpetuals (incl. hybrid tier-1 not used in tier-1) 581 581 775 775 Revaluation reserve, available-for-sale shares (at 90%) 154 154 57 57 Minority interest in revaluation reserve AFS shares (at 90%) 2 2 - 2 - 2 IRB provision excess 0 139 0 0 Subordinated liabilities 4 285 4 285 4 273 4 273 Tier-3 capital 18 18 43 43 Items to be deducted - 1 208 - 583 - 1 626 - 534

Weighted risks

Total weighted risk volume 147 444 128 536 155 231 138 490 Credit risk 136 677 107 461 142 849 112 227

Market risk 10 767 12 329 12 382 13 873Operational risk - 8 747 - 12 391

Solvency ratios

Tier-1 ratio 7.8% 8.5% 8.7% 9.3% CAD ratio 10.5% 12.2% 11.0% 12.8%

In order to strengthen its solvency ratios and with a view to making optimal use of hybrid instruments allowed by the Belgian supervisory authority, KBC Bank issued so-called non-innovative hybrid tier-1 capital instruments for an amount of 2 billion euros in the second quarter of 2008. In Belgium, innovative and non-innovative hybrid capital instruments, combined, can account for maximum 25% of Tier-1 capital (the innovative component is subject to additional restrictions).


Risk Management Extensive risk management information for 31-12-2007 is provided in KBC Bank’s 2007 Annual Report. A summary update of this information is provided below. For more information on the methodology used, please refer to the annual report. Credit risk data The main source of credit risk is the bank's loan portfolio. The table below provides an overview of this portfolio. It includes all (committed and uncommitted) working capital credit lines, investment credit, guarantee credit, credit derivatives (protection sold) and non-government securities in the investment books of the group's banking entities. It excludes government bonds, trading book securities, interprofessional transactions (deposits with financial institutions, currency transactions, etc.), short-term commercial transactions (e.g., documentary credit) and intragroup transactions. The loan portfolio therefore differs significantly from ‘Loans and advances to customers’ in the ‘Consolidated annual accounts’ section, Note 14 (this item, for instance, does not include loans and advances to banks, guarantee credit and credit derivatives, the undrawn portion of credit or corporate and bank bonds in the investment portfolio, but does include repurchase transactions with non-banks). KBC Bank loan portfolio 31-12-2007 30-06-2008

Total loan portfolio (in billions of EUR)

Amount granted 204.3 213.9

Amount outstanding 159.9 172.4

Loan portfolio by business unit (as a % of the portfolio of credit granted)

Belgium (retail) 29% 28%

Central & Eastern Europe and Russia 22% 24%

Merchant Banking 50% 48%

Total 100% 100%

Loan portfolio, by counterparty sector (selected sectors as a % of the portfolio of credit granted)

Real estate 7% 7%

Electricity 2% 2%

Aviation 0.4% 0.4%

Automobile industry 3% 2%

Impaired loans (in millions of EUR or %)

Amount outstanding 3 310 3 305

Specific loan impairment 1 943 1 969

Portfolio-based impairment 185 251

Loan-loss ratio (negative figures indicate a positive impact on results)

Belgium (retail) 013% 0.06%

Central & Eastern Europe and Russia 0.26% 0.43%

Merchant Banking 0.02% 0.16%

Total 0.11% 0.19%

Non-performing (NP) loans (in millions of EUR or %)

Amount outstanding 2 329 2 367

Specific impairment for non-performing loans 1 456 1 592

Non-performing ratio

Belgium (retail) 1.6% 1.5% Central & Eastern Europe and Russia 2.1% 1.9% Merchant Banking 1.0% 1.0% Total 1.5% 1.4% Cover ratio Specific impairment for non-performing loans/outstanding non-performing loans 63% 67% Specific & portfolio-based loan impairment for performing and non-performing loans/ outstanding non-performing loans 91% 94%


On 30 June 2008, the total leveraged finance portfolio (LBO/MBO transactions, see footnote to table for a definition) amounted to 3.0 billion euros; the average transaction size is 17 million euros. KBC's maximum leveraged finance exposure is limited to 3% of the merchant banking credit portfolio and to 500 million euros for the CEER loan portfolio. Additional information on leveraged finance* 31-12-2007 30-06-2008

Total granted amount of leveraged finance deals (in billions of EUR) 2.7 3.0

Granted leveraged finance portfolio, by sector Services 18% 17% Distribution 15% 18% Chemicals 11% 11% Telecom 8% 9% Machinery 7% 8% Other 41% 37% Total 100% 100%Granted leveraged finance portfolio, by transaction size (total amount in size interval/total leveraged finance portfolio)

Up to and including 10 million euros 12% 11% More than 10 million, but no more than 25 million euros 65% 61% More than 25 million, but no more than 50 million euros 19% 18% More than 50 million, but no more than 100 million euros 0% 7% More than 100 million euros 4% 4%

Total 100% 100% * Leveraged finance deals must meet the following criteria: 1. Involvement of a a private equity fund and/or management buyout. 2. Consolidated total net debt/EBITDA >= 4.5 or consolidated net senior debt/EBITDA >= 2.5.

Information on securitisation operations (ABS/CDO, suprime, monolines, etc.) Detailed information on KBC Group’s securitisations (including CDO and subprime exposure data) and exposure to monoline insurers is available in the ‘Securitisation Report, 30 June 2008’, which is available on www.kbc.com. Asset/Liability management data The Basis Point Value (BPV) in the table shows the change in the value of the portfolio if interest rates were to fall by ten basis points across the entire curve (positive figures indicate an increase in the value of the portfolio). The figures relate to KBC Bank, KBC Asset Management, CBC Banque, Centea, KBC Lease, KBC Bank Deutschland, IIB Bank, KBC Bank Nederland, Antwerp Diamond Bank, ČSOB (Czech Republic), CSOB (Slovakia), K&H Bank, Kredyt Bank, Absolut Bank and KBC Credit Investments.

BPV of ALM book, KBC Bank (in millions of EUR)

Average, 1Q 2007 70

Average, 2Q 2007 54

Average, 3Q 2007 41

Average, 4Q 2007 41

Average, 1Q 2008 54

Average, 2Q 2008 70

30-06-2008 74

Maximum, 1H 2008 74

Minimum, 1H 2008 43


Market risk data The table shows the Value-at-Risk (99% confidence interval, 1-day holding period) for the bank’s dealing rooms (KBC Bank in the table) and for the specialised equities subsidiary, KBC Financial Products. Market risk: VAR (1-day holding period; in millions of EUR) KBC Bank

KBC Financial Products

Average, 1Q 2007 4 10

Average, 2Q 2007 4 10

Average, 3Q 2007 4 13

Average, 4Q 2007 5 15

Average, 1Q 2008 5 15

Average, 2Q 2008 7 11

30-06-2008 8 11

Maximum, 1H 2008 9 30

Minimum, 1H 2008 3 9

Contact details

Investor Relations - KBC Group

E-mail [email protected] Website www.kbc.com/ir Address KBC Group NV, Investor Relations Office – IRO, 2 Havenlaan, 1080 Brussels, Belgium

Documents

Half-Year Report 1H 2008 - KBC Bank · KBC Bank, 1H 2008 Regulated information, 13 August 2008 – 7 a.m. KBC Bank is a listed company. This release contains information subject to